Employment contracts with senior executives often demand nothing, but commit the company to pay big without conditions. They are negotiated and written amidst irreconcilable conflicts of interest. The general counsel who negotiates competent ones with new CEO’s and EVP’s ends up making a career shortening decision. The board members who supported the GC at the beginning frequently blend into the woodwork when problems appear. Their excuse is “It’s up to management to sort out; we only advise.”

Even when the contracts are well-written, boards rarely enforce them. That’s usually because the departing top dogs know as many dirty secrets about company ops, and board approval of them or inaction, as the board or other execs know about the top dogs they want out.

The preferred solution is a truckload of hush money called a golden parachute. (Legitimate terminations also involve parachutes, but are rarely the ones making headlines.)

These guys knowingly left their traditional businesses in the dust and, like Enron, launched initially lucrative, but highly risky new ventures. Some of them in the belief that no one would know or that they were too big to fail. They are the last people who should be asked to fix their businesses or to spend taxpayer funds.

If boards were doing their jobs, they would contest these contracts. Why bother, if that exposes their own misdeeds or inaction and the government is just airlifting to them cargo-holds of cash without question?

Obama and Geithner should add a little heat and let the pot boil. If these guys tank, the US may still end up with the tab, but it won’t also have made these fraudsters as rich as Croesus.

[x-posted below]

For any non “retention bonuses”, I say lets see them. Could not have possibly had any competent performance components. I think it will be illuminating too see the business practices (bonus contracts) of these captains of industry.

I think our government leaders who are part of the financial industry or owned by it are trying to plumb the depths of just how many layers of corrupt sweetheart deals they can stack one on top of the other before the American people explode.

Things have gotten so bad and so corrupt that I wonder if this whole AIG bonus mess is meant to distract us from the truly historic looting of the US government that will take place under Geithner’s public private partnership program.

can you whup us up a quick recipie for a valid class-action suit LHP .. failing that .. i’ll happily loan you a monkey wrench to throw in the works ..

The letter and accompanying white paper from AIg make clear that if you get fired for cause –no retenion bonus.
If destroying your own comapnay –and maybe the world economy–is not grounds for termiantion for cause

what is?

It seems part and parcel the whole issue writ small. Give us money or you will be sorry (supposed key staff leaving). I say, don’t let the door smack your ass on the way out.

EPUed from last thread

After Enron CEO’s had to swear their financial statements were accurate AIG seems to have violated this law why is he not behind Bars?
There are plenty of unemployed financial people now and CEO’s we could hire to replace him. By we I mean us we own AIG.

So LHP when does he go to trial?

Has anyone looked to see if these employment contracts are out on the toobz?

Back in the Ports being sold and John Snow’s involvement, I was able to find all his employment contracts on FindLaw including the clause that stated that John Snow would receive a $3.4 million bonus if he left CRX for public service…… funny just months after signing that contract he was appointed Treasury Sec.

Is AIG a public company? if so these things could be in the public domain. One that might prevent it is that this is a unit not based in the US……

I don’t believe this crap about outside lawyers saying they are obligated to pay. If AIG did not pay the bonuses and the employees sued–tell me, where in the world would you find a jury that would vote in favor of the plaintiff’s?

John Yoo?

Just looked at the whitepaper. Thanks.

Do you own AIG stock? You need a stockholders derivative suit.

By the by, isn’t there supposed ot be AIG stock in big pension funds? Those fund managers should have enough cap share and enough business savvyand enough big law firmm talent to bring a very sophisiticated derivative suit. And win it.

Hint hint (in case any fund manager with AIG stock in thier portfolio read FDL)

Kids have been fired for less from Mcdonalds.

So LHP when does he go to trial?

LHP does not = Eric Holder

You gotta ask him

Here’s the good news:

Only seven employees will receive more than $3 million.

Katymine to the research courtesy phone…..

let us know what you find. *g*

“See, problem solved. I should be Treasury Secretary.”

when can you start?

Could the people who have pension funds with stock in AIG sue their Pension funds for not sueing? I think the old boys network has been keeping the lid on this.
And no I don’t own AIG well thanks to the taxpayer bailout I do but I don’t think I have standing to sue, or the cash.

Me and my big mouth……

Let’s require AIG to release the names of the recipients.

I tell you, I have trouble balanicing my own checkbook , but even without access to a calcualtor and armed only with an abicus, I , you, the kkids at the HS around the block from me—could do a better job than Paulsen or Geitner hae done.

They are just total suck ups to the robber barons

I wasn’t trying to hassle you but Eric Holder there are allot of things I would like to ask him.

Summers on George’s program said Obama’s position is that we should not govern in anger.
He just blew off criticism of the bonus payout.

We are wasting $100 million in tax payer bailout money and we the tax payers are not allowed to see how the money is spent or even just how AIG will pay us back?

Question:
Is it just the CEO’s employment contract that gets posted to the public domain in a public company or does all contracts of execs get posted?

Let’s require AIG to release the names of the recipients

You gotta give spew alerts baby!

AIG, release the names of bonus recipients? Hee hee hehhah hah [LHP rolling on floor clutghing side of belly in painful spasm from laughing]

Hell, they won’t even relase the names of the banks and other companies htey funnel TARP money to.

Employees at least have some statutory privacy protections, unlike those comapnies and banks.

Only seven. That is good news.

Can we please have an old fashioned take it to the streets now?

Imagine the signs:
You Stole Our Treasure
Organ Failure?
Downing Street Memos
America Doesn’t Torture
AT&T Spied on You for Cheney
On and on and on…

I know you weren;t. But feel very free to hassle Holder about this.

Call him, mail him, send a candygram

These are employees based in London….. want a bet how many of them pay taxes in the US anyway?

Senior executive employment letters (companies don’t like the word “employment” anywhere near the word “contract” even for top dogs) are most companies’ most closely guarded secrets. “Essential” terms for the top five execs are summarized in securities filings, but are typically written so as to disguise true compensation (while technically meeting the requirements to disclose it). It’s a cat and mouse game the SEC stopped playing vigorously about the time W came to power. So good luck finding them outside of a rare lawsuit (or divorce action, a la GE’s infamous past CEO).

The blogs can read a business plan as well as anyone. The only reason not to tell us is the plan is funny. The argument that investors will flee is bunk its already happened.
AIG went from $76 a share to 50 cents a share click the 5 year chart at the link.

http://www.google.com/finance?q=NYSE%3AAIG

Just how much worse does Geithner thinks it will get?

ohhh very good angle!

So does that mean that a trained attorney like Obama is suggesting that prosecuting someone for breaking our laws is synonymous with “governing in anger?” Because, if that’s what he thinks, he wasted a lot of time and money becoming a trained lawyer.

yes, exactly the point. it’s not rocket science or necessary to be able to balance a checkbook. it’s only necessary to decide to serve the people rather those who have already been obscenely serviced.

even more LHP gutting AIG
AIG speaks with forked tougue

Straw man argument.

It’s like saying we should not look back in anger at past serial felonies of senior government officials. What he means is don’t look back at all (the only thing a prosecutor ever does), or the GOP will turn you into a pillar of salt (about the only religious act Rush Limbaugh is capable of).

One sure way to get into a major traffic accident is to never look in the rearview mirror. Obama is telling us he wants to drive looking through a peep hole instead of an unobstructed windshield.

Are Dems afraid of fighting with the GOP bully? Imagine that, going from testosterone-overdrive Cheney and Shrub to a gelding.

2.96 billion AIG shares outstanding bankruptcy voids contracts even employment contracts right? So for 3 billion dollars we could buy AIG sure thats more than 100 million but considering how much we already own why not just force AIG into bankruptcy we are major shareholders I think we can do this.
The GOP wanted to do this to GM and they did not ask for that much cash.

That’s what he seems to think about any prosecution of Bush Admin officials.
His line there is to “look forward, not backward.”

Any plan Geithner has is predicate on the economy getting better. By wasting money that could go to the stimulus plan Geithner is reducing the chances of the economy getting better.

More on this this… ain’t the toobz wonderful?

http://www.bloomberg.com/apps/…..refer=home

It’s also that everysingle time in my life that someone told me that a finacial transaction was too compicated for me to understand, they were either trying to con me, or didn’t understand it themselves and were being conned.

Finance is not that complicated (OK I happen to have a IQ in the feakish mutant range, but still I hate math).

I used ot prosecute white collar crime. I still do private secotr Inspector general stuff, so more white collar investigtions.

I spend much of my day thinking abot and working on fincial transactions. Even big multi party multi nation transactions can still be expresses in a flowchart.

If no one can understand a transaction, why would anyone do it? how would they evalutate it’s benefit to themselves.

Never believe someone who tells you that it’s too complicated for you to understand.

That’s still seven too many from that division.

The company I work for has bonuses, described as ‘at-risk compensation’. The amount is based on how well everyone did the previous year, from the company level down to the individual level (reviews!). They don’t promise anything in writing, other than being eligible for it, and the amount isn’t final until about two weeks before it’s handed out (and it’s treated as if it were regular pay, with all the appropriate deductions).

If AIG and these other financial black holes can’t figure that much out, they really shouldn’t be bailed out: they’re too stupid to live.

Here’s a take on the subject by Josh.

Here’s one possibility: Gerry Pasciucco, AIGFP Interim Chief Operating Officer

Yep. BO continues to disappoint.

Here are a couple of possible people to contact:
AIGCommunications:
Nick Ashooh
212-770-3523
Nick.Ashooh@aig.com

Investor Relations:
Teri Watson
212-770-7074
Teri.Watson@aig.com

I want to know why no one has gone to jail or even been arrested and done the “perp walk”. Everyone says that these AIG persons were the root cause of the problems, so were their actions stupid, greedy, or criminal? In any case,doesn’t the US owns 81% of the company, so if the govt says no bonus period, then that should be the final say. So the govt has the power yet refuses to use it. Wall st ceos say that talent would leave if they do not get bonuses. Ahemmm, and go where exactly? Is any company hiring? Better yet, would any company that had any brains-ok so 99% of american companies seem to be run with the “Peter Principle” firmly in mind-hire people who screwed up as badly as these MOTU* did? They blew billions, is there any company that would hire them? I say, no bonus and let them walk. I vaguely remember a big stock broker back in the go-go 90s in Singapore working for a british company who did some very illegal things with money that was not his, he had a trial and was sentenced to jail. So why have none of the current crop of MOTU* been arrested??? hmmm?
* Masters Of The Universe

That is absolutely right. The idea that no one else can understand the complexity of transactions is the basis for the retention agreements: “AIGFP’s books also contain a significant number of complex – so-called bespoke – transactions that are difficult to understand and manage. This is one reason replacing key traders and risk managers would not be practical on a large scale.”

Paulson took non-voting shares in AIG and the other bailed-out Wall Street firms.

From the Bloomberg article:

The insurer requires recipients to keep the payments confidential, according to a contract obtained by Bloomberg News. Exceptions included financial and legal advisers, as well as immediate family. If awardees tell other outsiders about the existence of the program, they will forfeit future payments, the contract says.

Maybe that is standard. But I bet a lot of people are running through their memories of conversations. Too bad there isn’t a bounty…

Tim Geithner needs to acknowledge that the Left has been right about everything on the economy since the Bush years. And that he and his pals have been wrong.
Much like Bush you cannot learn if you don’t admit your mistakes and correct them.

I know this isn’t original but it has to be said.

GE HAD CONTRACTUAL OBLIGATIONS TO THE UAW.

And it didn’t take Republican Senators five minutes to insist that workers renegotiate those contracts. Ya think Sen. Corker is going to rise up and make the same demands on the Masters of the Universe?

Because contracts are sacrosanct. Except you know where they aren’t. Like when the counter party is a line worker. Somebody needs to tell these people that “Party like its 1999″ is just a song and not an operating principle for Wall Street.

I think this may explain a lot. From Edward Liddy’s wiki:

Upon taking the position of CEO at American International Group, Mr. Liddy had to resign his board position at Goldman Sachs

Liddy took the AIG job for $1 a year but he gets equity grants of unknown size. But remember it was Goldman that was the major benefactor of the government take over of AIG. It was Goldman’s Blankfein who was the only Wall Street banker in the room when Paulson (OK an ex-Goldman banker) and Geithner put together the initial AIG bailout.

Don’t matter we threaten to stop bailing them out and then we threaten to sell the nonvoting shares. Bankruptcy and ruin will get them to go our way.
We just need to punish one company and the rest will learn.

Conflict of interest is he running the company for the benefit of AIG shareholders or Goldman?

Tim Geithner needs to acknowledge that the Left has been right about everything on the economy since the Bush years. And that he and his pals have been wrong.
Much like Bush you cannot learn if you don’t admit your mistakes and correct them.

don’t forget the clinton years too – rubin and summers were wrong. stiglitz and the DFH in the anti-corp globalization movement were right. and the people who were reading/listening to alternative media (indymedia, democracy now!, etc) during that time had a clue.

me? i was listening to npr, etc. and had no fucking clue whatsoever. but now i am trying to pay better attention and i want to acknowledge the people who had it right, who were in streets and who were sounding the alarm before any of these issues were even on my radar.

I just wanted to agree that “too complicated to understand” is just another cop out by those in power when they don’t want to do something. If they want to do something, like say put these derivative contracts together in the first place they had no problem with complexity or understanding.

Voters paying attention to the issues are numbers are growing the government should be worried.

Unfortunately letting another one fail won’t happen. They still sting from letting Lehman fail.

I think as the economy gets worse more will fall we can’t bailout all of them.

They let Lehman go as an uncontrolled bankruptcy. AIG or bank nationalization would be a controlled bankruptcy. Investors might be wiped out and bondholders might take a hit but it would not have to be the chaos that Lehman caused and which Paulson very much allowed to happen.

I especially like Summers’ defense that, “We are a country of law”. I don’t think he’s kept up on the Bush/Obama DoJ.